Break-even time. Hampton Corporation’s research and development department is
presenting a proposal for new product research. The new product will require research,
development, and design investments of $6 million (discounted cash flow). Sales will
begin after four years and will generate an annual discounted net cash flow of $1.5
million starting in Year 3.
Required:
a. Calculate the break-even time for the new product.
b. What can Hampton Corporation do to reduce break-even time?
Which of the following is best defined as a cost that changes in totalas the level of
activity changes?
A.an opportunity cost
B.a fixed cost
C.a variable cost
D.a cost object
The use of total quality management and flexible manufacturing practices to reduce
setup costs enhances a company’s ability to use
A.economic order quantity methods.
B.just-in-time inventory methods.
C.first-in, first-out inventory methods.
D.last-in, last-out inventory methods.
Little League Baseball Manufacturer
The Little League Baseball Manufacturer purchases materials for the production of
customized little league baseball bats, hires workers to convert the materials to
customized finished baseball bats, and then offers the customized baseball bats for sale
to little league teams and the general public.
Refer to Little League Baseball Manufacturer.
Manufacturing costs such as the cost of the high quality hard woods specifically
selected by the customer for producing their own customized baseball bat fall into
which of the following categories?
A.direct material costs.
B.direct labor costs.
C.manufacturing overhead costs.
D.opportunity costs.
When measuring a division’s operating costs, direct noncontrollable operating costs
include
A.labor used in the division’s production.
B.salary of the division manager (controlled by top management).
C.costs of providing centralized services, such as data processing and employee
training.
D.company president’s salary.
Which of the following is not an example of appraisal costs?
A.Inspecting a sample of finished goods to ensure quality
B.Testing products in use at the external site
C.Inspecting production materials upon delivery
D.All of the answers are appraisal costs.
Which of the following statements is false concerning lean production?
A.Lean production eliminates inventory between producing departments.
B.Lean production requires flexibility to change quickly from one product to another.
C.Lean production requires increased time valuating inventories.
D.Lean production emphasizes employee training and participation in decision making.
A method for allocating joint-process costs is based on
A.opportunity costs.
B.outlay costs.
C.indirect costs.
D.net realizable value.
Operational measures of time indicate the speed and reliability with which
organizations supply products and services to customers. A company is more
competitive if the time to respond to customers is
A.longer.
B.shorter.
C.average.
D.None of the answers is correct.
When production levels are expected to increase within a relevant range, and a flexible
budget is used, what effects would be anticipated with respect to each of the following?
Fixed Costs Variable Costs
Per Unit Per Unit
A. Decrease Increase
B. Decrease No Change
C. No Change No Change
D. No Change Increase